THE LAW AND POLITICS OF WTO WAIVERS
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1 THE LAW AND POLITICS OF WTO WAIVERS Stability and Flexibility in Public International Law ISABEL FEICHTNER CAMBRIDGE UNIVERSITY PRESS
2 Acknowledgements page xiv 1 Why study the WTO waiver? 1 PART i: The stability/flexibility challenge in public international law and particularly the WTO 5 2 The stability/flexibility challenge in public international law 6 A. International law as public law 6 B. The flexibility challenge 8 I The domestic perspective 8 II The intra-regime perspective 10 III The inter-regime perspective 11 C. Ways to flexibilize international law: exceptionalism, managerialism and transnational political law-making 12 I Exceptionalism 13 II Managerialism 14 III Transnational political law-making 15 3 The WTO-public law of conflict management 20 A. The objectives of the WTO: reciprocal trade liberalization, protection of individual autonomy or conflict management? 21 I Trade liberalization to enhance welfare 21 II Trade liberalization to protect individual autonomy 23 III Conflict management 24 B. WTO law: contract or public law? I WTO law as contract vu
3 Viii CONTENTS 1 Law as fallback option in a community of interests under the GATT Law as an instrument to ensure efficient compliance 34 II WTO law as public law 38 1 WTO law's constitutive function From the protection of actual trade flows to the protection of market conditions Security and predictability for economic operators Legitimating compromise between competing interests Integration with other legal regimes 42 2 WTO law as restriction on the exercise of public authority 43 3 WTO law as constitution? 43 III Conclusion 45 C. Flexibility challenges 45 I Domestic preferences 46 II Claims of inadequacy and injustice 50 III Regime coordination 53 D. The potential of the waiver power to achieve flexibility 55 PART II: The practice and law of waivers 57 4 The waiver power and practice of the GATT 1947 and the WTO 58 A. The waiver power of the GATT 1947 and the WTO 58 B. The waiver practice of the GATT 1947 and the WTO 62 I Individual waiver decisions 65 1 Waivers to account for capacity problems Waivers that extend transitional periods to implement obligations under the Customs Valuation Agreement Individual Harmonized System waiver decisions Waivers of Cuba's obligation under Art. XV:6 GATT 72 2 Waivers to accommodate policy preferences WTO practice 73 (a) Waivers legalizing trade-related investment measures (b) 73 Waivers of the obligation to comply with specific commitments GATT 1947 practice 83 (a) Waivers to legalize protectionist measures 84
4 IX (i) US Agricultural Waiver 84 (ii) Hard-core Waiver and other waivers to legalize residual quantitative restrictions 86 (iii) UK Margins of Preferences Waiver 88 (iv) Waivers legalizing tariff surcharges - a special case of waivers to address the inefficiency of legal rules 90 (b) Waivers to legalize market integration 91 (i) ECSC Waiver 91 (ii) US Automotive Products Waiver 93 (c) Conclusion 96 3 Preferences - waivers to pursue external policy objectives Selected tariff preferences before the Generalized System of Preferences Towards a general exception from the most-favoured-nation principle for preferences Special trade preferences after negotiation of the Generalized System of Preferences 110 (a) GATT practice on special preference schemes outside (b) thegsp 111 WTO practice on special preferences outside thegsp 114 (i) The Cotonou and Bananas Waivers 116 (ii) The CBERA.ATPA and AGOA Waivers 119 (iii) ECGSP + preferences Conclusion 122 Collective waiver decisions Deferral of the obligation to comply Art. XX Part II GATT Art TRIPS Agreement Modification of legal rules GATT and WTO waivers to legalize trade preferences under the Generalized System of Preferences and among developing countries 132 (a) (b) 1971 waivers to legalize preferences under GSP and between developing countries waiver for preferential tariff treatment for least-developed countries The TRIPS Waiver Regime linkage Collective Harmonized System waivers: effective cooperation in a regime complex The Kimberley Waiver: deference to another international legal regime to avoid norm conflict Conclusion 157
5 III One waiver power - multipleflexibility instruments: a typology of waiver decisions 157 C. Unadopted and unrequested waiver decisions The law of waivers 163 A. Waiver decisions as secondary law 163 I Qualification as secondary legal acts 163 II Legal effects of waiver decisions Legal effects for the beneficiary of the waiver decision Legal effects for the organization and members who are not beneficiaries of the waiver decision 170 B. Substantive requirements for the exercise of the waiver competence 173 I The waiver competence 173 II Obligations that can be waived 175 III Substantive requirements The'exceptional circumstances'requirement Textual, systematic and historical interpretation Case law Waiver practice The rhetorical and procedural function of the 'exceptional circumstances' requirement in the waiver process No other legal justification No substantial trade diversion Consistency with the organization's objectives 194 C. The waiver procedure and process 196 I The waiver request 197 II Examination of waiver requests The organs involved The examination process Representation of the collective interest - the role of Secretariat and chairpersons Institutional linkages and participation of NGOs 213 III Decision-making Decision-making by the GATT CONTRACTING PARTIES Decision-making in the WTO 218 D. Form and content of waiver decisions 221 I The form of waiver decisions 221 II The duration of waivers 223
6 XI III The terms and conditions governing the application of waivers Preambles and chairperson statements Terms and conditions in the operative part of waiver decisions Requirements relating to the measure which is legalized by the waiver Phase-out and implementation requirements Notification, information and reporting requirements Compensation, consultation and dispute settlement Consequences of non-compliance with terms and conditions Creation of new obligations 237 E. Interpretation 238 I Narrow interpretation of waiver decisions? Interpretation of individual waiver decisions Interpretation of collective waiver decisions 243 II References to non-wto law to interpret waiver decisions 246 F. Review of waiver decisions 247 I Political review 247 II Judicial review Judicial review of waiver decisions Judicial review of compliance with the terms and conditions of a waiver decision Violation complaints based on the alleged violation of a treaty obligation Violation complaints based on the alleged violation of the terms of a waiver decision Non-violation complaints: liability for measures legalized by waiver decisions Non-violation complaints under the GATT 1947 and in the WTO Non-violation complaints with respect to measures justified by a waiver 262 (a) Requirements for a successful non-violation complaint 264 (b) Inconsistency of the measure with treaty law 265 (c) Nullification or impairment 266 (d) Consequences of a successful non-violation complaint 269 (e) When should non-violation complaints be admissible? 269
7 G. Waivers and domestic law 270 I The effect of waiver decisions in domestic legal orders 270 II Waivers required by domestic law 271 III Waivers and direct effect 272 H. Conclusions 272 PART in: The potential of waivers to address the stability/flexibility challenge in international law The potential of the waiver as a flexibility device 276 A. The accommodation of individual needs and preferences in international legal regimes 278 I Reservations Reservations to international treaties Reservations under the GATT 1947 and in the WTO 284 II Variable geometry 288 III General rules and exceptions and the need for additional exit options General rules Special and differential treatment Escape clauses The need for additional exit options The potential of waivers in light of the uncertainty concerning the operation of legal rules 297 (a) Uncertainty as to the effects of compliance 297 (b) Uncertainty as to the scope of obligation Waivers as exception for domestic preferences 300 IV Limitations on law enforcement Subsidiarity Compliance management 308 V Conclusion 310 B. The accommodation of collective needs and preferences: waivers compared to interpretation and amendment 311 I The need for political solutions to norm and interest conflicts 312 II The waiver as deference to another international legal regime 317 III Norm change through waivers 323 C. Conclusion The politics of the waiver process 327 A. The waiver process: bargaining, administration, debate 329
8 Xlll I Three types of international law-making: bargaining, administration and transnational politics Bargaining Administration Transnational politics 332 II Waiver processes in the WTO Special preferences waivers: bargaining for consensus Harmonized System waivers: administration in the WTO The TRIPS Waiver: political debate on norm change 341 B. The potential of the waiver process in increasing the legitimacy and effectiveness of WTO law 344 I The right to request a waiver 344 II Timely consideration of waiver requests 345 III Separation and specification of issues 345 IV Openness of the process to non-legal and non-economic arguments 347 V The requirements of a reasoned request and a reasoned decision Conclusion 353 Bibliography 355 Index 381
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